Why Australia has a tradie shortage1:06

Australia is facing a shortage of skilled trade workers as there's been a shift to concentrate on getting kids into university over TAFE or learning a trade.

November 20th 2017

a year ago

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Australia’s university system is in need of urgent overhaul. Picture: iStockSource:istock

NEARLY half of existing university degrees could be obsolete within a decade leaving graduates with “more debt and poor job prospects” if Australia’s university system is not drastically overhauled, a new report has warned.

Professional services firm EY interviewed more than 3000 students and employers and more than 50 university leaders, policymakers and observers for its University of the Future report, which concluded that not all institutions would be able to “make the leap” to cope with industry disruption.

“The case for change is clear,” the report said. “A growing cohort of graduates are leaving the university environment with more debts and few job prospects.

“Some university leaders estimate that around 40 per cent of existing degrees will soon be obsolete, which may mean institutions will lose their ‘cash cows’ and be forced into specialisation paths they may have not chosen.

“And some institutions have yet to digitise their operating models.”

According to the report, 46 per cent of current and past graduates said they felt their degree needed to be overhauled in light of the impact of digital technologies. Graduates were also asked whether their degree was relevant to their chosen career.

Nursing rated the highest on 87 per cent, followed by health services and support on 86 per cent, education on 80 per cent, law and paralegal studies on 79 per cent, business and management on 67 per cent and psychology on 67 per cent.

The courses that scored poorly in job relevance were humanities, culture and social sciences with just 36 per cent, followed by science and mathematics on 41 per cent, architecture and built environment on 48 per cent, creative arts on 48 per cent, engineering on 52 per cent and communications on 59 per cent.

Meanwhile, more than half of employers surveyed said degrees in commerce and management were not worthwhile. EY recommended universities collaborate more closely with industry to create course content to produce more work-ready graduates.

“Rather than specific types of degrees we’re saying will be redundant, it’s those than don’t evolve to include far more opportunities for work-integrated learning, whether that’s on-site or bringing commerce and industry into the academic environment,” said Catherine Friday, education leader for EY Oceania.

“The feedback we got from students was the experiences they have in universities are very theoretical, but that is simply not preparing them for the workforce. Students need the opportunity to get their hands dirty and be able to work in situations that far more closely resemble real work and real life.

“There is no grade in the work environment. Everything is expected to be ‘HD’ all the time, and done under pressure.”

Ms Friday said many were also expected to step into more complex roles than in the past, as lower-order jobs were increasingly being done by AI. “The workforce no longer takes graduates on long apprenticeships, they expect people to hit the ground running,” she said.

Australia’s university sector grew by more than 5 per cent per year between 2000 and 2015 and now generates $30 billion in revenue thanks to rising enrolments and different revenue streams. As of 2016 there were 1.4 million students at our 43 universities, around one-quarter of them from overseas.

The report outlined four possible future scenarios for Australia’s university sector, including a hands-on government approach that “actively champions universities as strategic national assets”, a hands-off government approach, a deregulated approach, and an “activist government” that restructures the sector to integrate vocational institutes.

It pointed to the rise of Udacity and Singularity University in the US — one of which offers “nanodegrees powered by leaders in industry” and the other that is “focused on scientific progress and exponential technologies” — as a warning for Australia.

“Disruptive models have yet to fully emerge in Australia, but there is growing potential for this to happen, and happen quickly,” it said. “Once the first new entrant cracks the market, we believe a deluge could follow, not least because of the lack of diversity in the sector.”

Just under three-quarters of graduates said completing a degree was worth the time and effort, but 40 per cent said they would not have pursued a degree if employers did not require one. While university graduates earn more over the course of their career than non-graduates, the increasing number of people holding a degree makes it difficult to stand out.

It’s a similar argument to that of George Mason University economics professor Bryan Caplan, who argued in his book The Case Against Education that only about one-fifth of the value of an education was the increase in “human capital”, while the rest was “signalling” to employers.

“A college degree now puts you in the top third of the education distribution, so employers who seek a top third worker require this credential,” Caplan wrote.

“Now imagine everyone with one fewer degree. In this world, employers in need of a top third worker would require only a high school diploma. The quality of labour would be certified about as accurately as now — at a cost savings of four years of school per person.”

It comes after a Grattan Institute report predicted more than 50,000 out of the 250,000 students who started a bachelor degree in 2018 would drop out, leaving many with “debt and regret”.

“Nearly 40 per cent of students who dropped out would not begin their degree again knowing what they know now, and about a third of them believe they received no benefits from their course. These students do not get value for their time and money.”

Education Minister Simon Birmingham said the report reinforced the need for performance funding reforms proposed by the Turnbull government. “Performance funding would put student outcomes at the centre of learning,” he said.

“Linking funding growth to performance outcomes will encourage universities to further improve their performance, support student retention, and boost graduate employment outcomes.

“We should be willing to ask those universities to account for their performance and to take steps to improve the results that they achieve and to be accountable for the record funding that they’re receiving.

“We’re also driving changes to the transparency of admissions information through the Higher Education Standards Panel so students get the information they need to make the right choices about their courses and understand what will be expected of them.”

Universities Australia chief executive Belinda Robinson hit back at the report, saying government data countered claims of growing employer dissatisfaction with university graduates and their qualifications.

“More than nine in 10 employers say university graduates were well prepared by their qualification for their current job,” she said in a statement.

“That’s according to the largest survey of its kind run by the Department of Education and Training and the only survey that is based on direct experience of graduates’ work. That’s the equivalent of a high distinction.”

FOUR FUTURE SCENARIOS

1. Champion University: A hands-on government actively champions universities as strategic national assets. Most students enrol in traditional undergraduate and graduate degree programs. Universities streamline operations by transforming service delivery and administration.

2. Commercial University: A hands-off government requires universities to be financially independent to ease national budget pressures. Students favour degree programs that offer work-integrated learning. Universities reposition by drawing closer to industry to collaborate on teaching and research.

3. Disruptor University: A hands-off government deregulates the sector to drive competition and efficiency. Continuous learners and their preferences for on-demand micro-certificates dominate as technology disrupts the workplace. Universities expand into new markets and services and compete against a range of new local and global educational services providers.

4. Virtual University: An activist government restructures the tertiary sector to integrate universities and vocational institutes, prioritising training and employability outcomes as humans begin to be replaced by machines. Continuous learners are the majority, preferring unbundled courses delivered flexibly and online. Universities restructure into networks that share digital platforms.